More Pipeline Piffle (And An Alaskan Absurdity)

A conservative group’s TV ad claims “we will all pay more at the pump” because the administration “blocked” the Keystone XL pipeline.

Senate Republican Leader Mitch McConnell claims that the pipeline “could have brought 700,000 barrels of oil to the market each day.”

The TV ad also claims that Obama “opposed exploring for energy in Alaska,” which is only half true.

All those claims are false or misleading. Regarding the pipeline, as we’ve reported, there’s nothing stopping more Canadian oil from coming into the U.S. right now. Existing cross-border pipelines could carry perhaps 1 million additional barrels of oil per day, and surplus capacity is projected to persist for years to come even without the Keystone project.

Furthermore, Obama hasn’t “blocked” it. The Keystone’s sponsor says it expects the White House to approve the northern leg, from Hardisty, Alberta, to Steele City, Nebraska, in 2013, after it submits an application for a new route around Nebraska’s environmentally sensitive Sandhills region. Meanwhile, it is going ahead with the southern portion, which Obama has endorsed, ordering agencies to expedite permitting.

As for the claim that Obama “opposed exploring for energy in Alaska.” The truth is that Shell Oil days ago said it expects to begin drilling exploratory wells this summer in the Chukchi and Beaufort Seas off Alaska’s Arctic coast, now that the Interior Department has granted approvals for the company’s oil spill response plans.

Nine Dollar Gas

The latest TV ad to heap blame on Obama is “Nine Dollar Gas” from the American Energy Alliance, an advocacy group that does not disclose the sources of its money. It is a “subsidiary” of the industry-funded Institute for Energy Research. Thomas J. Pyle, a one-time aide to former Texas congressman Tom Delay, is president of both groups. Politico reported that both groups are funded in part by brothers Charles and David Koch and their donor network.

AEA announced that it was spending $2.5 million to air the ad for two weeks in eight states: New Mexico, Colorado, Nevada, Iowa, Florida, Ohio, Virginia and Michigan. The ad first started airing in Jacksonville, Fla., March 30, according to Kantar Media’s Campaign Media Analysis Group. The group said it would later spend another $1.1 million on the buy, and include “radio, Internet, and print media advertising” as well as “grass roots education and mobilization.”

The 30-second spot makes a number of incorrect or misleading assertions, but we’ll take the pipeline claim first. It says Obama “blocked the Keystone pipeline, so we will all pay more at the pump.”

That echoes a common Republican refrain, which Sen. McConnell has just repeated in an opinion piece circulated to home-state newspapers in Kentucky. (Thanks to Al Cross, of the University of Kentucky’s Institute for Rural Journalism and Community Issues, for alerting us to this.)

Mitch McConnell, March 30: His [Obama’s] consent to that single project could have brought 700,000 barrels of oil to the market each day and created thousands of new America jobs. Yet President Obama blocked the pipeline, despite an exhaustive three-year review.

The truth, however, is that the pipeline has been delayed, not “blocked.” And it could not possibly bring in more Canadian oil until many years in the future.

What we wrote in a March 22 item — about a similarly misleading ad by the Republican-leaning Crossroads GPS group — bears repeating here.

First, the president has merely delayed a decision on the controversial northern leg of the project, which would bring oil from Hardisty, Alberta, to Steele City, Nebraska. The company that wants to build the pipeline– TransCanada Corporation — has yet to choose a new route through Nebraska to avoid the environmentally sensitive Sandhills area. The original route met with bipartisan opposition from the state’s political leaders. The company says it is still working with Nebraska officials but expects to submit a new application to the White House this year. It expects to get approval in the first quarter of 2013, and place the pipeline in service in 2015.

Meanwhile, there’s nothing to prevent more Canadian oil from coming into the U.S. right now, should Canada be able and willing to send it. Existing cross-border pipelines already have much more capacity than they are using. Those pipelines have the capacity to bring in more than 1 million barrels per day of additional Canadian oil, according to a study produced for the U.S. State Department by EnSys Energy & Systems Inc. of Lexington, Mass., in December 2010. And the study predicts that surplus capacity will persist at least until the year 2020, even if the Keystone is never built (see table 3-4). The 700,000 barrels that McConnell refers to is the additional surplus capacity that the Keystone’s northern leg would provide.

(Our sister site, FlackCheck.org, made fun of this GOP claim with an apt analogy. Just as installing more mailboxes doesn’t result in getting more mail, adding more surplus pipeline capacity won’t result in more oil.)

Meanwhile, Obama has embraced the southern portion of the Keystone project. It will begin in Cushing, Okla., and help eliminate a bottleneck that has prevented a glut of lower-cost oil from reaching U.S. Gulf Coast refineries, which have been clamoring for it. On March 21, Obama even said he would order federal agencies to make faster permitting and review decisions, a mostly symbolic gesture, since a TransCanada Corporation official had said earlier that he expects to get the needed permits and to begin construction as soon as this June anyway. The company says it expects the Cushing-to-the-Gulf pipeline to start carrying oil in “mid to late 2013.”

Exploring for Energy in Alaska

The American Energy Alliance ad also claims that Obama “opposed exploring for energy in Alaska.” But that’s not entirely true. In fact, Shell Oil says it expects to begin drilling exploratory wells in the Chukchi and Beaufort Seas this summer, now that the administration has approved the company’s spill response plans.

Much to the chagrin of environmentalists, the administration has been active lately in moving along exploratory drilling plans for Alaska. On Feb. 17, the Interior Department approved Shell Oil’s spill response plan for exploratory drilling in the Chukchi Sea. Then, on March 28, the Interior Department approved Shell’s spill response plan for the Beaufort Sea. The Associated Press reported that Shell expects to begin drilling in both locations this summer.

Associated Press, March 28: Shell hopes to drill exploratory wells in both locations during the summer open-water season using separate drilling ships. Shell Alaska spokesman Curtis Smith said in an email that the approval is a major milestone.

“It further reinforces that Shell’s approach to Arctic exploration is aligned with the high standards the Department of Interior expects from an offshore leader and adds to our confidence that drilling will finally commence in the shallow waters off Alaska this summer,” he said.

Shell does need other federal approvals before drilling can begin, but the company says it is confident that it can gain those approvals.

The American Energy Alliance bases its claim that Obama “opposed exploring for energy in Alaska” on the president’s opposition to the American Energy and Infrastructure Jobs Act of 2012, which would have lifted the ban on drilling in the Arctic National Wildlife Refuge. That’s true. He did oppose the bill for that reason, among others. But that doesn’t mean that the president is opposed to exploring for energy elsewhere in Alaska.

Old Oil Claims

The TV ad also contains several claims that we have already vetted and written about. Among them:

“Since Obama became president gas prices have nearly doubled.” That’s true. But as we’ve repeatedly written, oil is sold on world markets, and gasoline prices are driven by the cost of oil. The reason for the current spike in oil prices is “mainly geopolitical,” according to Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of several books on world oil markets. It’s misleading at best to suggest there is a connection between the president’s energy policies and the doubling of gasoline prices.

“[Obama] gave millions of tax dollars to Solyndra, which then went bankrupt.” It’s true that the Obama administration loaned $535 million to Solyndra, a solar energy company that has since filed for bankruptcy. But what does that have to do with high gasoline prices? Nothing.

“Obama’s energy secretary said we need to, quote, ‘boost the price of gasoline to the levels in Europe.’ That’s $9 a gallon.” It’s true that Steven Chu said those words. But, as we previously wrote, Chu made that remark before becoming Obama’s energy secretary and even before Obama won the 2008 presidential election. Not long after becoming energy secretary, Chu said it would be “completely unwise to want to increase the price of gasoline.”